First of all, Cydia is awesome, no question about that. But if you have anything but a 3GS or 4G, it can be painfully slow to load and that can be a deterrent for keeping things updated. Let’s have a look at a much faster way.

You will need SSH enabled on your iPhone/iTouch to begin with. If you do not, you must install OpenSSH from Cydia and probably the SSH Toggle for SBSettings. Also you’ll need to install Apt from Cydia. Look for ‘Apt 0.7 Strict’.
Now go ahead and SSH into your device. Be aware that you cannot use the apt tools while Cydia is running. The commands you will use the most frequently are as follows:

apt-get update
Updates the repositories. Equivalent to refreshing in Cydia.

apt-get upgrade
Installs any updates available.

apt-cache search
Search the repositories

apt-get install
Install a package. If there are dependencies, you will be prompted to continue.

apt-get remove
Uninstall a package

dpkg –l
Lists all installed packages

respring
Respring your device from the command line

A couple of things to note is that for install and remove, you can list multiple packages separated by a space. When searching, the beginning of each line is the package name. Sometimes it will be a single word, though usually it will follow the pattern: com.companyname.appname.

Even if you only ever plan on using Cydia for managing your packages, I would highly recommend installing Apt (along with syslog). Ever installed something that really screwed your phone or been stuck in a reboot or respring loop? I know I have, and it’s no fun. If you’ve got Apt at your disposal you can connect via SSH and remove the offending package if you know what it is.

Otherwise you can do the old tail –f /var/log/syslog and watch for clues as to the which app is responsible. The source for this hint is iPhone World; it's been extremely helpful.

[crarko adds: I haven't tested this one. I don't jailbreak so I don't test these.]

How does this compare with using Apt-Backup from cydia? It seems to do this entire process for you, unless I'm missing something. I mean it's nice to have apt, I suppose, but for the purposes of keeping track of what packages you've had installed it seems to be easier.

When I search in Cydia for "Apt. 0.7 Strict" it comes up with nothing. Does this hint require that we add some additional repository? If so, it should indicate this. Note it does show "APT 0.7 HTTPS Method" (which was already installed in my case).

You could also use the Cydia (kinda crappy) terminal app to do this on the iPhone, or my favorite way is to SSH into the device from the device itself using TouchTerm, which is a free SSH client with an excellent terminal emulator. You have to be connected to a wireless network to do this, though. Then you just connect to the devices internal IP address.